Hexaware Technologies CEO R Srikrishna warns that AI advancements are forcing a fundamental overhaul of IT service business models. While AI coding tools threaten traditional engineering revenue, the company is prioritizing trust and domain expertise to navigate intensifying competition. Investors are tracking how these operational changes impact margins as the firm shifts its strategy to handle complex AI integration for enterprise clients.
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The IT services sector is facing a period of intense pressure as artificial intelligence fundamentally changes how software is developed and maintained. R Srikrishna, CEO of Hexaware Technologies, recently described the current industry environment as a knife fight, signaling that the era of predictable, passive business growth is fading. He noted that AI coding assistants are increasingly automating routine engineering tasks, forcing firms to move beyond traditional service models to remain competitive.
Evolving Service Models in the AI Era
While AI poses a disruption to traditional billing practices based on engineering hours, Hexaware management sees a dual reality. On one hand, automation is reducing the need for basic coding labor. On the other, the rise of AI labs such as Anthropic and OpenAI is creating a demand for sophisticated service partners. Srikrishna pointed out that just as hyperscalers like Microsoft and Amazon Web Services developed their own professional services arms to handle complex deployments, these new AI entities are now doing the same. This trend suggests that while lower-end tasks may decline, the need for partners who can translate unpredictable AI outputs into reliable business solutions is growing.
Operational Changes and Talent Strategy
To adapt to this new environment, Hexaware is looking to rethink its approach from sales to talent acquisition. The company is emphasizing the need for leadership that can manage intense competition, moving away from traditional hiring pools toward professionals with deep domain expertise. Understanding complex regulatory requirements, such as anti-money laundering and the Foreign Corrupt Practices Act, is becoming a key differentiator. The firm is also testing a more agile model, aiming to launch new service offerings monthly and validating them with 100 customers per quarter to ensure they meet actual market needs.
Market and Financial Context
The broader IT index has faced significant headwinds, with many firms seeing valuation adjustments as markets assess the impact of AI on long-term margins. Investors are paying close attention to how established players like Hexaware maintain profitability while investing in these new operational capabilities. In the company's CY25 performance, Hexaware reported revenue of Rs 13,430 crore and a profit of Rs 1,368 crore. The key monitorable for shareholders will be whether these strategic shifts can successfully defend profit margins and market share against competitors who are also rapidly retraining their workforces and adjusting their service portfolios.